Trump Tower Toronto condo closing date extended after OSC inquiries

Facing a multimillion-dollar lawsuit from disillusioned buyers, the developers of Toronto’s Trump International hotel are standing their ground, citing the property’s long-term investment potential.

Talon International directors Alex Shnaider and Val Levitan are at the centre of an escalating legal battle, in which buyers allege they were targeted by “an investment scheme and conspiracy based upon reckless and negligent misrepresentations” of the luxury hotel’s financial prospects. With the closing date less than a week away, the four clients named in the lawsuit say they want their deposits back — and dozens more are contemplating similar action, according to lawyer Jeff Landmann.

TORONTO — Talon International Inc. has extended the closing date for the sale of hotel condominium units at Trump International Hotel and Tower Toronto in order to deal with inquiries by the Ontario Securities Commission.

The new deadline of Dec. 13 come as Talon faces a lawsuit from a group of investors, who have also sought a formal investigation by the OSC.

The former deadline was Thursday.

Talon developed and owns the property and licenses the Trump brand name. A company affiliated with U.S. celebrity businessman Donald Trump manages the hotel for Talon.

The company said it was fully co-operating with the provincial securities regulator, which has been asked for an investigation by a group of investors who are suing Trump and Talon and individuals associated with the two businesses.

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“The extension has been made to allow more time for Talon to respond to recent inquiries made by the Ontario Securities Commission,” Talon said in a brief statement Monday.

In a statement issued Sunday evening, the group of investors said their appeal to the OSC was a “last-bid effort” to obtain help before the closing date, which had been Nov. 29 before the extension was announced.

The investors said every Canadian bank has refused to offer financing to them, despite assurances from Talon that hotel units could be easily financed as residential condo units.

The investors said they’ve learned that Canadian banks are treating the hotel project as a commercial enterprise and are refusing financing as a condo purchase.

They also say their investments are running up losses of more than $175 a day per unit because of the current shortfall between maintenance fees and hotel unit revenues.

Investors say they’re now faced with either having to come up with substantial amounts of cash to close or resort to secondary financial institutions which will only provide partial financing for the project as a commercial investment at high interest rates.

The investors have launched a multi-million dollar lawsuit against Talon and their directors, as well as a number of Trump organizations and their directors, including Donald Trump Sr.

The plaintiffs’ claims allege that investors were persuaded into investing in the Trump Hotel on the basis of alleged negligent or reckless misrepresentations, and that promises and projections offered were allegedly inaccurate and in contravention of securities regulations.

None of the allegations have been proven in court.

In 2004, when the hotel project was first being planned, the investors say Talon sought permission from the OSC to be exempt from regulatory requirements for commercial investments, and provided a number of promises and conditions to obtain those exemptions.

In granting an exemption, the OSC made it a strict condition that Talon and Trump Hotel not market the hotel units as a cash-flow investment.